Coca Cola 2005 Annual Report Download - page 24

be no quick fixes. In addition, the amended and consolidated complaint alleges that the charge announced by
the Company in November 2004 should have been taken early in 2003 and that, as a result, the Company’s
financial statements were materially misstated during 2003 and the first three quarters of 2004. The plaintiffs, on
behalf of the putative class, seek compensatory damages in an amount to be proved at trial, extraordinary,
equitable and/or injunctive relief as permitted by law to assure that the class has an effective remedy, award of
reasonable costs and expenses, including counsel and expert fees, and such other further relief as the Court may
deem just and proper. On November 21, 2005, the Company and the individual parties filed a motion to dismiss
the amended and consolidated complaint. The plaintiffs filed their response to that motion on January 27, 2006.
The Company believes that it has meritorious defenses to this consolidated action and will vigorously
defend itself therein.
On June 30, 2005, Maryann Chapman filed a purported shareholder derivative action (Chapman v. Isdell, et
al.) in the Superior Court of Fulton County, Georgia, alleging violations of state law by certain individual current
and former members of the Board of Directors of the Company and senior management, including breaches of
fiduciary duties, abuse of control, gross mismanagement, waste of corporate assets, and unjust enrichment
between January 2003 and the date of filing of the complaint that have caused substantial losses to the Company
and other damages, such as to its reputation and goodwill. The defendants named in the lawsuit include Neville
Isdell, Douglas Daft, Gary Fayard, Ronald Allen, Cathleen Black, Warren Buffett, Herbert Allen, Barry Diller,
Donald McHenry, Sam Nunn, James Robinson, Peter Ueberroth, James Williams, Donald Keough, Maria
Lagomasino, Pedro Reinhard, Robert Nardelli and Susan Bennett King. The Company is also named a nominal
defendant. The complaint further alleges that the September 2004 earnings warning issued by the Company
resulted from factors known by the individual defendants as early as January 2003 that were not adequately
disclosed to the investing public until the earnings warning. The factors cited in the complaint include (i) a
flawed business strategy and a business model that was not working; (ii) a workforce so depleted by layoffs that it
was unable to properly react to changing market conditions; (iii) impaired relationships with key bottlers; and
(iv) the fact that the foregoing conditions would lead to diminished earnings. The plaintiff, purportedly on
behalf of the Company, seeks damages in an unspecified amount, extraordinary equitable and/or injunctive
relief, restitution and disgorgement of profits, reimbursement for costs and disbursements of the action, and
such other and further relief as the Court deems just and proper. The Company’s motion to dismiss the
complaint and the plaintiff’s response have been filed and fully briefed. The parties now are awaiting a ruling.
The Company intends to vigorously defend its interests in this matter.
During May, June and July 2005, three similar putative class action lawsuits (Pedraza v. The Coca-Cola
Company, et al. Shamrey, et al. v. The Coca-Cola Company, et al. and Jackson v. The Coca-Cola Company, et al.)
were filed in the United States District Court for the Northern District of Georgia by participants in the
Company’s Thrift & Investment Plan (the ‘‘Plan’’) alleging breach of fiduciary duties under the Employee
Retirement Income Security Act of 1974 by the Company, certain current and former executive officers, and the
Company’s Benefits Committee. The purported class in each of these cases consists of the Plan and persons who
were participants in or beneficiaries of the Plan between May 13, 1997 and April 18, 2005 and whose accounts
included investments in Company stock. The complaints allege that, among other things, the defendants failed
to exercise the required care, skill, prudence and diligence in managing the Plan and its assets, take steps to
eliminate or reduce the amount of Company stock in the Plan, adequately diversify the Plan’s investments in
Company stock, appoint qualified administrators and properly monitor their and the Plan’s performance and
disclose accurate information about the Company. The plaintiffs, on behalf of the putative class, seek, among
other things, declaratory relief, damages for Plan losses and lost profits, imposition of constructive trust as a
remedy for unjust enrichment, injunctive relief, costs and attorneys’ fees, equitable restitution and other
appropriate equitable and monetary relief. By order of the Court, an amended complaint was filed in the
Jackson case on September 16, 2005. The amended complaint supplements the detailed allegations of the
original complaint and names specific individual defendants who served on the Benefits Committee and the
Asset Management Committee. Identical amended complaints were also filed in Pedraza and Shamrey. In each
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